(NASHVILLE) March 9, 2023 — The Tennessee Works Tax Reform Act of 2023 is advancing in the Senate and cleared the Senate Revenue Subcommittee with a positive recommendation on Tuesday. This legislation, sponsored by Senate Majority Leader Jack Johnson (R-Franklin), proposes a number of changes to Tennessee’s tax code to lower the tax burden on businesses, boost Tennessee’s economic competitiveness, promote entrepreneurship and small business formation, and provide targeted relief to families. This is one of Governor Bill Lee’s top legislative initiatives for 2023.
“In Tennessee we are committed to low taxes,” said Johnson. “We believe that Tennessee businesses and citizens are in the best position to decide how to spend their own money, and this tax-cut proposal demonstrates that we practice what we preach. I applaud Governor Lee for this bold proposal to provide more growth opportunities for businesses and financial relief for families on every-day expenses. We are proud to be one of the lowest taxed states in the nation, and this move to further cut taxes strengthens our dedication to being a pro-business and pro-family state with low taxes.”
The tax cuts would provide significant tax relief to small businesses by lowering the burden of the franchise and excise tax as well as the business tax rate. Under the proposal, over 23,000 small businesses in Tennessee will have their excise tax liability reduced to zero by exempting the first $50,000 in income from the state’s excise tax. It also exempts up to $500,000 of business property from franchise tax liability. The tax cuts would exempt 140,000 Tennessee businesses from the business tax by raising the threshold for business tax exemptions from $10,000 to $100,000 of gross receipts. In addition, it reduces the highest business tax rate from 0.3% to 0.1%.
The proposal will also help Tennessee lead the nation in economic competitiveness, while prioritizing Tennessee businesses. It incentivizes businesses to hire Tennesseans and headquarter in Tennessee by changing the way the excise tax is calculated to favor businesses with a higher percentage of their properties and jobs located in Tennessee than in other states. It also ensures state tax deductions for research and development (R&D) expenses – which help companies grow, innovate and produce superior products and services. This move comes after the federal government ended yearly R&D tax exemptions for businesses. The measure also removes unfair taxes on certain manufacturing facilities with unsold inventory.
Finally, the proposal will deliver for working families by creating a three-month sales tax holiday on food during August, September and October 2023. It also seeks to incentivize businesses to provide paid family leave to employees by establishing a state paid family leave franchise and excise tax credit on wages paid for a two-year pilot period.
General Assembly confirms new Tennessee Supreme Court Justice
Members of the General Assembly confirmed the appointment of Dwight E. Tarwater to the Tennessee Supreme Court in a joint session in the House chamber on Thursday.
Tarwater, a Knoxville attorney, brings more than 40 years of legal background to the court, including decades of trial and appellate experience. He also previously served as chief legal counsel to former Gov. Bill Haslam from 2014 until 2019.
The vacancy on the Tennessee Supreme Court will be created by the retirement of Justice Sharon Lee, effective Aug. 31. The General Assembly is required to confirm appointments for Supreme Court Justices per an amendment added to the state constitution in 2014. Justices are retained through a “yes” or “no” election every eight years.
Also on Thursday, the General Assembly confirmed the appointment of Matthew Wilson to the Tennessee Court of Criminal Appeals for the Western Section. Wilson previously served as an assistant United States attorney in the Western District of Tennessee. He brings significant criminal law experience to the Court of Criminal Appeals, including nearly 20 years of legal service at both the state and federal levels. Wilson fills a vacancy that was created by the death of Judge John Everett Williams in September.
Increasing teacher pay – A bill that would provide pay increases to Tennessee teachers cleared the Education Committee this week. Sponsored by Senate Majority Leader Jack Johnson (R-Franklin), Senate Bill 281 would each year increase the base salary for teachers until it reaches $50,000 in the 2026-2027 school year. The bill would also end the practice of local school district deductions for national, state and local labor organizations. Currently, school districts are permitted to provide these unions with a free benefit of collecting dues on their behalf. Taxpayer resources in K-12 education should not be used to support these activities, whether political or otherwise, of any organization, including labor unions. The legislation does nothing to restrict a teacher’s, choice to join and fund any activity by the union; it simply ends the practice of using taxpayer resources to fund the collection of dues for the union’s benefit.
Providing flexibility to LEAs with class sizes – The Senate approved legislation to give more local control to school districts by providing them with flexibility in class sizes, while still keeping the guardrails in place to protect students. Senate Bill 197, sponsored by Sen. Jon Lundberg (R-Bristol) maintains the class size maximum while removing the average maximum class size. Tennessee is one of the few states with both a maximum average class size and maximum class size. The measure also allows an LEA or Charter School to apply for a waiver from the Commissioner of Education for maximum class size requirement. The Commissioner of Education is required to approve or deny the waiver within 5 business days or the waiver is automatically approved for the remainder of the school year. The maximum average class size per grade level: 25 students for K-3, 30 students for 4-6, 35 students for 7-12, and 25 students for CTE.
Strengthening election integrity – The Senate approved legislation to strengthen election integrity in Tennessee by putting protections in place to prevent abuse of “fail-safe balloting.” Under this process, if the address on a voter’s ID does not match his/her current address, then that voter casts a fail-safe ballot and signs an affidavit stating that he/she does live at the address where the vote is being cast. Senate Bill 854, sponsored by Sen. Bo Watson (R-Hixson), would allow a candidate to request a list of all the voters who changed their address at the polling place to vote in the election along with copies of the fail-safe affidavits. This bill also states that in the event of a recount, the state election commission must verify the addresses of all fail-safe ballots.
Minimizing trauma of child sexual assault victims in court – The Judiciary Committee this week passed a bill that aims to minimize trauma for underage victims of sexual assault during the criminal justice process. Under current law, when a minor is sexually assaulted, a forensic interview may be completed. These interviews, which are conducted by trained professionals, are recorded so that they may be used in any court proceedings. Current law only allows these videos to be used for minors under the age of 13 and only for sexual offenses. Senate Bill 419, sponsored by Speaker Pro Tempore Ferrell Haile (R-Gallatin), extends the admissibility of forensic interviews in court for all children under 18 years of age, and allows forensic interviews to cover statements on sexual and physical abuse. The law also adds an additional qualification for forensic interviewers that increases the credibility of forensic interviews and their admissibility in a court of law. The bill will prevent children from being further traumatized by being required to testify in court in front of their abuser.
Reducing barriers for law enforcement to carry handguns – This week, the Judiciary Committee passed two bills that would reduce barriers for retired federal, state, and local law enforcement and military officials to carry a handgun. Senate Bill 521, sponsored by Senator Frank Niceley (R- Strawberry Plains), reduces the handgun permit fee for retired military personnel to the same fee that retired police officers have to pay. Senate Bill 515, sponsored by Senator Jon Lundberg (R-Bristol), allows retired law enforcement officers employed on a part-time basis by a higher education institution to carry a handgun on the property. The person must have retired in good standing and have served for at least twenty years to be legally allowed to carry on higher education property.
Strengthening self-defense protections for bear attacks – Sponsored by Senator Paul Bailey (R-Sparta), Senate Bill 1309 would allow Tennesseans living next to the Great Smoky Mountains National Park to take, harm or kill a bear that enters their property and poses a threat. The bear must be acting in a manner that presents imminent danger, death or serious bodily injury in order for the bill to apply. The bill also requires property owners to notify the Tennessee Wildlife Resources Agency (TWRA) within 24 hours after killing or seriously injuring a bear if possible. A bear cannot be removed from the site, repositioned, sold or transferred without authorization by the agency. The bill advanced out of the Senate Energy, Agriculture and Natural Resources Committee this week and moves to the Senate floor.
Supporting state employees with sick children – A bill to increase support for state employees who must care for their sick children is advancing. Under current law, state employees may not utilize sick leave grants from the state sick leave bank for any illness of a family member. Senate Bill 533, sponsored by Speaker Pro Tempore Ferrell Haile (R-Gallatin), will allow state employees to utilize the state sick leave bank when caring for a sick child. In order to utilize grants of sick leave from the bank, employees must first take five consecutive days with no pay. The bill was unanimously approved in the State and Local Government Committee this week and now moves to the senate floor for passage.
Expanding training compensation – Correctional officers and deputy sheriffs are required to take 40 hours of inservice training per year, but only deputy sheriffs are paid an $800 supplement to do so. Senate Bill 1002, sponsored by Senator Ken Yager (R-Kingston), allows correctional officers to also receive the $800 supplement once they complete the training. Senate Bill 457, sponsored by Senator Bo Watson (R-Hixson), also gives an $800 supplement for emergency medical services personnel for completing a 40-hour training. Both bills advance to the Senate Finance, Ways and Means committee.
Expanding benefits for police dispatchers – Legislation will ensure that police dispatchers killed in the line of duty receive the same financial and insurance benefits as first responders killed in the line of duty. These benefits can include a $250,000 annuity, a one-time $25,000 payment from the state, and health insurance benefits to the surviving spouse and children of the first responder’s family. Senator Ken Yager (R-Kingston) sponsored Senate Bill 1134, which advanced out of the State and Local Government Committee this week.
Sergeant Chris Jenkins Law – Senate Bill 552, sponsored by Senator Adam Lowe (R-Calhoun), would make it a crime for a person to transport a ladder not properly secured to prevent it from falling onto a public roadway. The legislation is named after Sgt. Chris Jenkins who was fatally struck by a semi-truck while removing a ladder from Interstate 75 in Loudon County on Feb. 3, 2022. If approved, a violation of the law would be a Class C misdemeanor while an improperly secured ladder that caused a motor vehicle accident would result in a Class A misdemeanor. It would not change any additional requirements that currently exist for commercial motor vehicles. The bill advanced out of the Transportation and Safety Committee on Wednesday and now moves to the Senate floor.
Protecting Consumers from Increased Streaming Service Prices- Across the country, municipalities are bringing class action lawsuits against streaming providers such as Netflix and Hulu in an attempt to force streaming providers and their customers to pay cable franchise fees for the content customers receive from the internet. Senate Bill 456, sponsored by Senator Bo Watson (R-Hixson) and approved by the Senate this week, seeks to continue an existing state policy that ensures no cities or counties can collect franchise fees. If the legislature does not intervene, families with streaming service subscriptions could pay up to 5% more on each streaming service bill.
Combating high healthcare costs – Senate Bill 1392, cosponsored by Lt. Governor Randy McNally (R-Oak Ridge) and Senator Shane Reeves (R-Murfreesboro), seeks to strengthen the Right to Shop Act by creating a viable avenue to negotiate fair prices with out-of-network providers in non-emergency situations. If a patient negotiates a lower price with an out-of-network provider, the patient can submit paperwork to their insurance company and have their out-of-pocket cost applied to their deductible. The bill seeks to help Tennesseans combat rising health care costs.
Protecting patients seeking medical advice relating to marijuana – Sponsored by Senator Shane Reeves (R-Murfreesboro), Senate Bill 859 seeks to provide legal protection for patients across Tennessee seeking medical advice relating to the use of marijuana. The bill prevents a person’s statement regarding the use or possession of marijuana to healthcare providers from being used as evidence in a criminal trial. Some medications can have unintended consequences when mixed with cannabis, and many patients feel there is not enough legal protection for them to openly discuss with their medical provider the effects that using medical marijuana could have with their existing medications. The bill advanced out of the Judiciary Committee and will next be considered by the full Senate.
Addressing the shortage of special education teachers — The Education Committee this week passed a bill that seeks to increase the number of special education teachers in Tennessee amid an ongoing shortage. There are over 1,200 teacher vacancies in school districts across the state, and most of them are in special education. Sponsored by Senator Paul Bailey (R-Sparta), the Tennessee Special Educator Scholarship Act (Senate Bill 1305) would provide scholarships to college juniors and seniors who work as an educational assistant to a special education teacher at a Tennessee public school. The scholarship amount is $750 per semester, and those who receive it must agree to work as a special education teacher at a Tennessee public school for at least three years following graduation. There are currently about 9,300 special education paraprofessionals in Tennessee and an estimated 500 of them would be eligible for the scholarship program outlined in the bill. Bailey said the idea for the bill came from his son, who volunteered his time to help special needs students when he was in high school because his school didn’t have enough special education teachers.
Expanding eligibility for the Tennessee HOPE Scholarship — Sponsored by Senator Bo Watson (R-Hixson), Senate Bill 112 expands eligibility of the Tennessee HOPE Scholarship for nontraditional students to include Western Governors University (WGU).
Access and Opportunity Act- This week, the Senate approved legislation to ensure that students who move schools in the middle of the school year are not academically penalized. Senate Bill 443, sponsored by Senator Adam Lowe (R-Calhoun), gives all students the same opportunities within their school and allows a transfer student to immediately participate in their new school’s activities such as clubs, organizations and Advanced Placement and honors classes.